There’s faint hope on the fiscal front: The Senate’s budget negotiator, Sen. Patty Murray, D-Wash., said that she “believes” there is a path forward to a deal with her House counterpart, Rep. Paul Ryan, R-Wis., on easing across-the-board spending cuts known as the sequester in return for other deficit-reduction measures. Murray’s comment, however cryptic, was welcome because if there’s no agreement by a mid-December deadline, further indiscriminate cuts in discretionary spending, both to defense and non-defense, are likely, starting Jan. 15. And that result would exacerbate the basic problem: Discretionary federal spending, already approaching a historic low, is bearing the entire burden of fiscal adjustment while entitlement spending continues to devour an ever-greater share of federal revenue — which also needs long-term enhancement.
Of course, even a modest-size deal now would make little impact on that structural problem. Under current law, federal debt held by the public will stay near its current elevated level, 73 percent of gross domestic product, for the next decade, according to the Congressional Budget Office (CBO) — after which the level will commence rising, with, it said, “signficant negative consequences for both the economy and the federal budget.” The only way to “put the federal budget on a sustainable path for the long term,” the CBO noted, is “to make significant changes to tax and spending policies.”
That quotation comes from the CBO’s latest report on the deficit-reduction options facing Congress, the first such compendium it has issued since March 2011. Couched in the nonpartisan agency’s neutral language, the report nevertheless conveyed both fresh data and a powerful message: The obstacles to sound fiscal policy are purely political. Specifically, Congress and the president must resolve to tackle programs and tax breaks that benefit middle- and upper-middle-class America.